Legalese 2009 (Week 21)


Barter – a contract wherein one of the parties binds himself to give a thing in consideration of the promise of the other contracting party to give another thing (see Comments and Cases on Sales and Lease, p. 47 [2005])


ART. 1468.  If the consideration of the contract consists partly in money and partly in another thing, the transaction shall be characterized by the manifest intention of the parties.  If such intention does not clearly appear, it shall be considered a barter if the value of the thing given as part of the consideration exceeds the amount of the money or its equivalent;  otherwise, it is a sale. (Civil Code)


The intention of the parties is paramount in determining whether the transaction is one of barther or of sale.  Such intention may be ascertained by taking into account the contemporaneous and subsequent acts of the parties.  If this intention cannot be ascertained, then the last sentence of Article 1468 applies.


S, a sugar miller, and B, a manufacturer and dealer of whisky, entered into an agreement whereby S will deliver sugar worth PhP20,000 to B, who will deliver whisky worth PhP20,000 to S.  On the date of the exchange, B only had bottles of whisky worth PhP5,000.  With the consent of S, B paid the difference of PhpP15,000 in cash.  Did the parties enter into a contract of barter or a contract of sale?  (see Comments and Cases on Sales and Lease, p. 47 [2005])